With Steam: simply make sure that you have the latest version (at least 1.0.4).
With standard install: if your game version is 1.0.3 or lower, download the 1.0.4 patch (official site) and extract it into your game folder (making sure to preserve the directory structure of the archive).
Extract it to your preferred location (e.g. C:\BanishedKit) where you want to work from
Copy your game data files to the modkit folder. E.g.:
From C:\Program Files (x86)\Steam\SteamApps\common\Banished\WinData to C:\BanishedKit\bin\WinData
Run the batch file from the command line. E.g. C:\BanishedKit\BuildResource.bat (will take a few minutes)
Run the developer build and start modding. C:\BanishedKit\bin\Application-x64-profile.exe